Chancellor Rachel Reeves has announced that around nine million pensioners in England and Wales will receive the winter fuel payment this winter, in a £ 1.25 billion u-turn of Government plans.

The Government has faced increasing pressure to change course following backlash on the decision that stripped millions of the annual payment, worth up to £300, last winter. In an effort to balance what was described as a £22 billion “black hole” in the public finances, the payment criteria were reduced to just state pensioners on means-tested benefits, such as Pension Credit. Confirming the U-turn, Ms Reeves said the Government had “listened to people’s concerns”, and was now able to widen eligibility because Labour had restored “stability” to the economy. Here’s everything we know so far.

What is the winter fuel payment?

First launched in 1997, the winter fuel payment is a tax-free benefit to help older and vulnerable Britons meet the costs of heating their homes over the colder months.

The payments, which are distributed by the Department for Work and Pensions (DWP), are typically made to eligible people between November and December every year.

Who is eligible for the winter fuel payment?

The payment was previously available to everyone above the state pension age (currently 66) in the UK, but in the 2024/25 tax year, new rules meant only low-income state pensioners on means-tested benefits would qualify. Ms Reeves said the move would help save the Government between £1.3billion and £1.5billion per year.

This reduced the number of pensioners receiving the payment by around 10 million, from 11.4 million to 1.5 million.

However, following mounting pressure from Labour ranks, the Government has now confirmed the payment will be restored to the vast majority of pensioners due to new eligibility criteria. This is set to take effect as early as this winter.

Under the new rules, state pensioners in England and Wales with an income of under £35,000 a year will get the winter fuel payment automatically.

To be eligible, people must have reached state pension age by the week of September 15 this year.

Those with an income above the £35,000 threshold will also receive the payment, but it will then be reclaimed from them in tax.

Devolved authorities in Scotland and Northern Ireland will each receive a funding uplift so they too can meet the new threshold.

According to the Treasury, pensioners who do not want to receive the payment can opt out.

How much is the winter fuel payment?

During the 2024/25 tax year, payment amounts ranged between £200 and £300, and the amount eligible people received depended on their birth date.

People who live alone received:

• £200 if they were born between September 23, 1944, and September 22, 1958
• £300 if they were born before September 23, 1944.

If a person and their partner jointly claim any of the benefits, one receives a payment of either:

• £200 if one or both were born between September 23, 1944, and September 22, 1958
• £300 if one or both were born before September 23, 1944.

The Treasury claims the new arrangement will cost £1.25 billion in England and Wales, while means-testing winter fuel will save the taxpayer £450million.

Speaking during visit to north London, the Chancellor said: “From this winter, nine million pensioners will now receive winter fuel payments. It will be still means-tested, but at a higher level, we’ve listened to people’s concerns around the level of the means test.”

Ms Reeves suggested that the “stability we’ve brought back to the economy” meant the Government was able to change the eligibility threshold for winter fuel payments. She added: “We will set out in the normal way, in the budget, how everything is funded, but no-one should be in any doubt about my commitment to the fiscal rules to ensure that the sums always add up.”

The Chancellor told Sky News there was “still work to do to ensure that the sums always add up”, and also insisted the reversal did not mean the Government was “going back to the universal system” it had scrapped.

She added: “I don’t think it is right that the very richest pensioners have their fuel bills subsidised, but this year nine million pensioners will get the winter fuel payments.”

Age UK, the leading charity for older people in the UK, welcomed the Chancellor’s announcement.

Caroline Abrahams CBE, charity director at Age UK, said: “The Government’s winter fuel payment announcement makes this a good day for older people. The decision to restore the winter fuel payment to nine million pensioners – all but those on the highest incomes who should be able to pay their heating bills without it – is the right thing to do and something that will bring some much-needed reassurance for older people and their families.”

However, a think tank has warned the u-turn will add to complexity in the tax system and may not save much money.

Alex Clegg, economist at the Resolution Foundation, said: “This U-turn doesn’t represent a return to the status quo. The new means-test will create new complexity in the tax system, including a cliff-edge for those with around £35,000 of income.

“The reported savings of £450 million will be reduced further by the cost of increased pension credit take-up as a result of the original policy and the cost of administering the new means-test.”

He added: “The real question is why it is now a priority to pay winter fuel payments to over three-quarters of pensioners, with almost half of the new beneficiaries in the richest half of the population, when previously it was judged that only one in 10 needed support.”

Conservative leader Kemi Badenoch claimed the Prime Minister had “scrambled to clear up a mess of his own making”. She said: “I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms. This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The Prime Minister should now apologise for his terrible judgment.”

Liberal Democrat Leader Sir Ed Davey said: “Finally the Chancellor has listened to the Liberal Democrats and the tireless campaigners in realising how disastrous this policy was, but the misery it has caused cannot be overstated. Countless pensioners were forced to choose between heating and eating all whilst the Government buried its head in the sand for months on end, ignoring those who were really suffering.

“We will now study the details of this proposal closely to make sure those who need support actually get that support. The pain they went through this winter cannot be for nothing.”